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Rupiah Softens As Palm Oil Slips, CDS Unwinds Some Tightening, CPI Data Eyed

IDR

Spot USD/IDR has added 38 figs thus far and last changes hands at IDR14,870. Bulls need a rally above Jul 22 high of IDR15,038 to regain control. Meanwhile, bears keep an eye on the nearby 50-DMA, which kicks in at IDR14,810.

  • USD/IDR 1-month NDF last seen +18 figs at IDR14,871. Topside focus falls on Jul 21 high of IDR15,133, followed by Jul 15 cycle high of IDR15,190. On the flip side, should we get below the 50-DMA (IDR14,829), bears could take aim at Jun 27 low of IDR14,788.
  • Indonesia's CDS premium (monitored by Bank Indonesia as a gauge of rupiah vulnerability) tightened sharply from its 164bp peak in mid-July but has recoiled from multi-week lows this morning. It has widened ~17bp today and last sits at 116bp.
  • Palm oil futures slipped from Friday's peak today. The most active contract traded in Kuala Lumpur trades -MYR119.00 at MYR4,170/MT when this is being typed.
  • Indonesia's manufacturing sector expanded at a faster pace in July, the latest S&P Global M'fing PMI survey showed. Headline index climbed to 51.3 from 50.2 recorded in June. The authors of the survey pointed to the encouraging news that "July saw a softening of price pressures" across both "cost burdens and selling prices," albeit "upside risks to price rises remain."
  • The latest set of Indonesia's CPI figures will be published at the top of the hour. Headline inflation is expected to have quickened to +4.82% Y/Y in July from +4.35% prior. With price growth driven primarily by supply-side factors, Bank Indonesia is currently putting more emphasis on underlying dynamics. Participants in a Bloomberg survey expect core CPI to print at +2.86% Y/Y, up from June's +2.63% but below the +3.0% mid-point of Bank Indonesia's target range.
  • Later this week, focus turns to Q2 GDP, due for release on Friday.
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